Why does a trust avoid probate

You can change those choices if you wish; you can also revoke the trust at any time. When you make a living trust, you should also make a back-up will. Doing so will ensure that any property not transferred to the trust will go to the people or organizations you want to receive it. If you don't make a will, any property not included in your trust will be distributed according to the laws of your state—usually to the nearest relatives.

After a revocable living trust is created, little day-to-day record keeping is required. Just be sure to do the required paperwork whenever you transfer property to or from the trust. That shouldn't be difficult. In the real estate contract and deed transferring ownership to the new owners, Monica and David sign their names "as trustees of the Monica and David Fielding Revocable Living Trust. No separate income tax records or returns are necessary as long as you are both the grantor and the trustee.

IRS Reg. Income from property in the living trust must be reported on your personal income tax return; you don't have to file a separate tax return for the trust. When you die, the person you named in the trust document to take over—called the successor trustee—transfers ownership of trust property to the people you want to get it. In most cases, the successor trustee can handle the whole thing in a few weeks with some simple paperwork. No probate court proceedings are required.

Making a living trust takes about the same amount of time and is only a little more complicated than making a will. If your circumstances aren't complicated and you are willing to invest a few hours of your time using an estate planning book or software, you can create a valid, effective trust document.

After your death, the probate process can take a considerable length of time, during which your estate's assets are frozen and inaccessible to your heirs.

The living trust can help to avoid probate obstacles. A proper living trust bypasses the probate process for any assets held by the trust, which means a faster and smoother distribution of your assets to your beneficiaries. Probate is a court-supervised process that is required before the assets in your estate can be distributed to your beneficiaries. Having a will means the court-ordered distribution of your assets following probate will be in accordance with your wishes.

But a will doesn't protect your assets from the probate process itself. If you have a will, your executor must first apply to or petition the probate court to begin probate , and it's only after the process is completed that they are authorized to distribute the assets of your estate in accordance with the instructions you've set out in your will. And if you don't have a will, your estate must still go through probate.

Rather than an executor, the probate court appoints a personal representative who assumes the duties of an executor. Because there is no will, the distribution of your assets once probate is completed will be governed by your state's intestate succession laws. While a number of factors have an impact on the length of the probate process , probate usually takes between one to two years to complete. And if you do have a will and it's contested, the probate process can take much longer before your estate is settled and your assets distributed according to the terms of your will.

Because the assets comprising your estate are frozen during the probate process , they remain inaccessible to your heirs until probate is completed. By using a living trust, you can avoid the necessity of the probate process for any assets that are held by the trust, and the distribution of those assets can take place immediately following your death.

The living trust works to avoid probate because the trust itself owns any assets you transfer into it. At your death, your estate is made up of all the assets you own. Because your living trust legally holds title to the assets it holds, these assets aren't considered a part of your estate, and therefore do not need to go through the probate process.

Because setting up a living trust is more complicated than setting up a will, it's always a good idea to consult with an estate planning attorney to ensure you set up your trust properly. If you opt to do it yourself, you need to make sure you're using proper trust language; your living trust must be properly drafted in order to be valid.

If you want your assets to avoid the probate process, the living trust is an effective option in your estate planning process. Any assets held by your living trust will not be considered a part of your estate, and your successor trustee can begin distributing those assets according to the terms of the trust immediately following your death.

Contents 5 min read. Belle Wong, J. Connect … Read more. Living Trusts. A living trust can be an important part of your estate plan, but watch out for errors that could hamper your estate planning objectives or invalidate the trust. Estate Planning Basics. By drafting a living trust, designating beneficiaries, and holding property jointly, you may be able to avoid probate.

Last Wills. Attorney's fees, court costs, executor's fees, and any other expenses incurred by the court when processing probate are all paid for out of the proceeds held within the estate. It is possible for the probate court to release certain short-term support funds to the beneficiaries while the process is ongoing, but this is by no means guaranteed.

There are simplified probate proceedings available depending on the value of the estate and depending upon the state of residence when the person died. The simplified probate procedures allow individuals to petition the court to circumvent probate if the state does not exceed the value set by the state. Most people, however, do not wish to leave these decisions up to a court. Probate involves taking inventory of all property and assets and appraising those assets in order to pay debts and taxes incurred by the estate, and then distributing the remaining funds to the beneficiaries afterward.

When a person establishes a living trust, they are able to place all of their property and assets into that living trust. The revocable living trust basically becomes the owner of everything held within the trust, and the person who formed the trust maintains control over the assets and property in the name of the trust.